March 17, Crimea annexed without a shot

March 17. Russia annexes Crimea in referendum win. Markets have, for now, reversed some of the nervous trade seen at the end of last week, with dollar/yen back up to 101.80.  However, the Chinese yuan is weaker this morning as China widened its trading band to 2%.
–For now, US markets are content to focus on the domestic picture, with the FOMC result and economic projections due on Wednesday.  Today includes Empire State expected 6.5 and Industrial Production at +0.3 vs -0.3 last.
–I would say that the slowdown in China and a weaker currency, along with light sanctions on Russia are likely to be disinflationary at the margin.  At the same both Abe and Obama are begging for higher wage growth to spur inflation, with Abe making a hard push to counter the effects of a tax increase.
–5/30 edged to a new low Friday just below 206.  doesn’t appear to have much of a bounce this morning, though I am sure vol will be under pressure as Ukraine was split without military action.
–The Fed has, for the most part, been inaccurate in forward projections, over estimating growth and under estimating the fall in the unemployment rate.  Both Yellen and Fischer seem more concerned with sluggish employment.
–Here’s an interesting snippet: At the Bank of Israel, Fischer “…decided to keep the rate unchanged until the following month, he recalled telling his advisers, when the situation would be clearer. “It is never clear next time; it is just unclear in a different way,” came the response from his second-in-command.  And so, Fischer said Friday, he learned his lesson: “don’t overestimate the benefits of waiting for the situation to clarify.”
http://wsau.com/news/articles/2014/mar/15/fed-nominee-fischer-policy-decisions-are-best-made-early/

Posted on March 17, 2014 at 5:24 am by alexmanzara · Permalink
In: Eurodollar Options

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